Spain pre-approves six housing crisis measures

Spain’s governing parties PP and Sumar finally came to an agreement on Tuesday September 29th to approve a new set of housing regulations.

Although the government had been trying to get these new laws approved for a while, the recent approval comes after public pressure following the case of Maricarmen, the 87-year-old woman evicted from her home in the capital of Madrid.

According to government sources, the governing parties have reached an agreement to approve several housing measures to “respond to citizens’ demands and advance rights”.

In order for them to pass and come into force, however, they will need approval in Congress from other parties. 

The new regulations have been divided into two separate royal decree laws.

Spanish Minister of Housing Isabel Rodríguez has urged political parties to support both bills in the Lower House this Friday October 2nd and send a clear message to the public.

“Congress has the opportunity to tell Maricarmen that her suffering was worthwhile, that she did not die in vain, and that many people will benefit from her struggle,” she said.

The first decree is aimed at resident protection and renting, while the second deals with the issue of contract renewals.

The first decree contains the majority of the new measures, which are focused on regulating the rental market and protecting tenants, particularly vulnerable groups.

Moratorium on evictions until 2030

The government want to protect against eviction and will extend this for individuals and families in vulnerable situations until 2030.

Ban on vulture funds

The purchase of housing by investment or vulture funds will be banned until 2028. The ban will be applied not only based on the legal status of the buyer, but also on how the transaction is carried out. The prohibition will extend to acquisitions below market price or through packages of properties when their sole purpose is to obtain an immediate profit. It’s unclear what will happen after this time, whether they will be allowed again or not. 

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Contract extensions

Existing rental contracts expiring before December 31st, 2028, may be subject to a mandatory two-year extension.

Temporary accommodation and room rentals

There will be stricter regulations governing the terms of seasonal and room rental contracts. While the government hasn’t provided new details on the matter, back in July of this year they explained that room rentals would generally be considered normal residential leases, which means that they will be subject to the same rules as other apartment or property rentals. They also stated that the total rent for all rooms in the same apartment cannot exceed the total rent for the entire apartment and that if the property is located in a high-demand area, it must also comply with the rent limits in that area.

Tourist rentals

A new penalty regime will be established to crack down on illegal tourist accommodation, which is operating without a valid tourist licence.

Tax incentives

Tax breaks will be given to both tenants and landlords who own just one or a couple of properties. This is similar to the plan that the government announced back at the beginning of this year to issue a 100 percent tax rebate to landlords who don’t raise rents, but it’s unclear exactly which tax breaks this new one will include.

The second royal decree is specifically dedicated to regulating the automatic renewal of rental contracts.

What happens next?

As mentioned, both decrees must now be discussed and approved in Congress, but this could be tough.

The conservative People’s Party (PP) maintains its position in not wanting to approve any decree issued by the Socialist-led government. Party leader, Alberto Núñez Feijóo, has argued that “eight years of misguided housing policy” will not be resolved by an executive decree.

Far-right party Vox agreed with the PP and has criticised the government for “trying to fix the problems of the last eight years with one decree”. 

The fact that Spain’s two main right-wing parties will no doubt oppose the new housing laws comes as no surprise as they regularly vote against any bill presented by Pedro Sánchez’s party.

What’s more concerning for Spain’s leftist government is that other parties such as Catalonia’s Junts and ERC as well as the Basque Country’s PNV and EH Bildu have not yet confirmed if they will offer their support to the two housing decrees.